Strategic Clarity in Banking: Role of Top Management-Team Demography

Abstract

The relationship between the demographic composition of the top management team and strategic clarity was analyzed using data from a sample of retail banks. The demographic characteristics of education, homogeneity in age and tenure, and heterogeneity in educational major and functional background were analyzed. Controlling for organizational size and firms' performance, banks with a clear strategy are characterized by top management teams that are heterogeneous on education major and functional background. These results suggest support for the benefits of cognitive diversity for top managers engaged in strategic decision making.